Setting fees when starting up in practice
Accountants, of all professionals, are the ones who should be best placed to set their fees so as to cover their costs and generate a sufficient profit, writes Mark Lee.
The challenge when starting out though is that often there are only limited fixed costs to cover, no direct staff costs and only negligible variable costs. As you start to build up your practice how do you decide what to charge?
The historical approach was to focus on what you wanted to earn per hour and then to set an hourly charge-out rate. I sense that few start-up practices can afford to operate on this basis any more.
As one accountant mentioned to me recently: “The idea of quoting fixed fees and value based fees isn’t new or revolutionary any more. It’s the norm.”
This may overstate how far we have come but it does confirm my view that start-up practices need to identify fixed prices for their services rather than quote hourly rates. The only common exception is where...